Crane count dips

Look up and you might notice something missing from the skyline of Kelowna. A lot fewer tower cranes are working in the city than we’ve seen in the past few years.

The crane count has fallen to just 8 compared to 19 in May of 2023, according to statistics provided to Castanet by WorkSafeBC.*

Sharp drop in building permit value

According to a Statistics Canada report, Kelowna saw the sharpest drop in building permit value of any census metropolitan area in the country year-over-year in September. While the national average went up by $1.3 billion, or 11.5 per cent, in Kelowna it dropped 83 per cent.

“Last year we were probably far above the average with some of the projects we permitted and this year, we’re way below the average,” said Ryan Smith, planning director with the City of Kelowna.

Smith points out that some of the towers where cranes have wrapped up work started three to four years ago.

“What we’ve seen since then is quickly rising interest rates which have really impacted, among other things, the viability of these types of projects.”

Only time will tell if all the large projects nearing completion will help ease the local housing crunch. Smith says a good indicator will be when the Canada Mortgage and Housing Corporation releases an updated rental vacancy rate for Kelowna, likely in late January or early February.

Year-to-date as of the end of October, the City of Kelowna has issued 1,424 building permits for just under $558 million in development, compared to 1,675 over the same time frame last year, when the value of permits was $1.64 billion.

Falling interest rates could trigger new investment

While interest rates are now falling, which could trigger renewed building activity next year, there’s also uncertainty on the political front.

“There’s a lot of incentives in place from various levels of government that are helping developers get projects to a certain point of the approval process where they’re choosing to pause,” notes Smith. “They’re looking at what are my costs going to look like in 2025? Are those government incentives still going to be there? What does the environment look like?”

The interim executive director of the Canadian Home Builders Association-Central Okanagan predicts building activity will pick up in the spring. Cassidy deVeer says signs are emerging of a resurgence after a slow 2024.

"There's so many people that are on the sidelines and a lot of people have made a lot of money with the interest rates being higher. They had money in savings. They made a lot of money and so, not everyone has struggled through high interest rates, a lot of people have, but not everybody," said deVeer.

"The stock market has also been really great, so there's a lot of people out there that do have money and they will invest in housing when it makes sense to invest in housing. As interest rates come down, as the rate of return on GICs come down, they will look to spend that money elsewhere and it's usually going to be housing."

Return to buying frenzy unlikely

However, deVeer doubts the Central Okanagan will see the buying frenzy that took place during and in the first few years after the pandemic.

"COVID, obviously, had a massive impact and that's probably a housing market we will never see again. Hopefully, we don't. I think for most people it was a crazy time to work, it was a crazy time to buy," deVeer says.

"Homeowners buying houses sight unseen isn't really in anybody's best interest. But, if we can get to 2016-2017 numbers, I think that's going to show the strength of our area," she notes.

In the meantime, the CHBA-CO will continue to work with all levels of government on housing policies that make it easier to build.

*Data is limited to cranes that have designated radio frequencies assigned. Additional self-erect tower cranes that do not require radio communication may be operating in the area.